The real Gross Domestic Product (GDP) growth is expected to recover in the third and fourth quarter of the current financial year on back of pick up in domestic drivers, mainly public consumption and investment, strong service exports and easy financial conditions, the Reserve Bank of India\u2019s (RBI) Financial Stability Report said.<\/p>\n\n\n\n
\u201cDespite this recent deceleration, structural growth drivers remain intact. Real GDP growth is expected to recover in Q3 and Q4 of 2024-25,\u201d the report said.<\/p>\n\n\n\n
During H1:2024-25, real GDP growth (y-o-y) moderated to 6.0 percent from 8.2 percent and 8.1 percent growth recorded during H1 and H2 of 2023-24, respectively.<\/p>\n\n\n\n
India\u2019s GDP growth slumped to its lowest level in seven quarters at 5.4 percent in the second quarter of FY25.<\/p>\n\n\n\n
On December 26, Finance Ministry said that India’s economic growth is projected to reach around 6.5 percent in real terms for FY25, supported by strong rural and urban demand, improved capital formation, and robust government spending.<\/p>\n\n\n\n
\u201cOn the demand side, rural demand remains resilient, as highlighted by the 23.2 percent and 9.8 percent growth in two- and three-wheeler sales and domestic tractor sales, respectively, in October-November 2024. Urban demand is picking up, with passenger vehicle sales registering YoY growth of 13.4 percent in the same period and domestic air passenger traffic witnessing robust growth. Consequently, we expect the economy to grow at around 6.5 percent in real terms in FY25,\u201d the Finance Ministry said in its Monthly Economic Review (MER) for November 2024.<\/p>\n\n\n\n
The economy is expected to perform better in the October-March period, following a 5.4 percent GDP growth rate in Q2. \u201cGrowth in October-March is likely to be better than in H1. Food price pressures are likely to decline gradually, supported by an optimistic farm sector outlook,\u201d the report noted.<\/p>\n\n\n\n
Government capital expenditure is a major growth driver, with increased spending boosting infrastructure projects and capital goods sectors. \u201cThere are signs of capital formation growth rebounding early in H2 FY25. The order books for infrastructure and capital goods grew sharply in FY24 and H1 FY25, indicating a pent-up investment impulse that will play out in the quarters ahead,\u201d the report added.<\/p>\n\n\n\n
The infrastructure sector is expected to gain traction, with cement, steel, and electricity industries benefiting from post-monsoon demand and government-led initiatives.<\/p>\n\n\n\n
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